Business Directories

Oil tops $108 on Libya supply, Ukraine fears

London, May 9, 2014

Brent crude rose above $108 per barrel on Friday, supported by tension in Ukraine and limited supply from Libya, where a recent deal to reopen oil export terminals seemed unlikely to go ahead.

Pro-Moscow separatists in eastern Ukraine ignored a public call by Russian President Vladimir Putin to postpone a referendum on self-rule, declaring they would go ahead on Sunday with a vote that could lead to war.

Brent crude for June gained 60 cents to $108.64 per barrel by 0740 GMT, after closing 9 cents lower on Thursday.

U.S. oil was up 50 cents at $100.76. The contract, which settled 51 cents lower on Thursday, was on course for its first weekly gain in three, boosted by a surprise drop in U.S. crude inventories last week.

A Libyan government deal to reopen major oil ports controlled by rebels looks likely to unravel as the appointment of a new Islamist-backed prime minister has fuelled distrust that is eroding support for the accord.

Still, Libya's government said it remains committed to implementing an agreement with the rebels occupying the eastern ports of Ras Lanuf and Es Sider and hopes the export terminals will reopen soon.

"It's the same old story: Ukraine and Libya," said Commerzbank senior oil and commodities analyst Carsten Fritch.

"All this should keep the oil price supported and speaks in favour of further rising prices," he added, alluding to clashes between pro-Russian rebels and Ukrainian forces and the weekend's referendum.

Leading to a further worsening of relations between Russia and the West, European Union governments have laid the groundwork for possible sanctions against Russian companies, including energy giants, over Ukraine.

Oil investors were also watching the outcome of talks between Iran and world powers in ending Tehran's disputed nuclear programme, with the slow, steady progress helping cap gains in oil prices.

Iran and six world powers held more "useful" talks on Tehran's nuclear programme, both sides said, although a Western diplomat said they were still struggling to overcome deep disagreements on the future of Iranian atomic capabilities.

The two days of expert-level talks in New York were a prelude to next week's political-level negotiations in the Austrian capital Vienna. – Reuters